US Defends Yen Intervention with $97 Billion Operation
US Treasury Secretary Scott Bessent defended Washington's intervention in the Japanese yen market last month, arguing that it was not a loan to Japan and therefore carries no repayment risk. Bessent made his comments in response to an August 13 letter from Senator Elizabeth Warren questioning how the US used its Exchange Stabilization Fund (ESF) during the coordinated US-Japan currency operation.
The intervention, which reached nearly $97 billion, was part of a larger Japanese effort to stabilize the yen after it fell below 163 per dollar. Japan's Ministry of Finance disclosed that foreign-exchange intervention between July 30 and August 26 totaled ¥15.3993 trillion.
Bessent argued that the US action was necessary because yen instability is not solely a Japanese problem, but also affects global markets through the yen carry trade. He noted that Japan is one of the largest foreign holders of US Treasuries, and a disorderly currency move could force investors to unwind positions and push American borrowing costs higher.